Understanding the Crossing of Checks: Definition and Importance

Q: How do I cross a check?

You can cross a check by drawing two parallel lines across its face and optionally adding words like Account Payee.

Q: Does crossing a check affect its negotiability?

No, crossing a check does not affect its negotiability; it simply restricts how it can be cashed.

Q: What happens if I lose a crossed check?

If you lose a crossed check, report it to your bank immediately to prevent unauthorized access.

Q: Can I transfer a crossed check to someone else?

Typically, a crossed check cannot be transferred to another person unless it is specifically allowed by the type of crossing.

Definition & meaning

The crossing of checks is a banking practice that designates a check to be paid only through a specific bank, known as the collecting banker, rather than directly at the bank counter. This method enhances the security of the check, ensuring that only the collecting banker can deposit the funds into the payee's account. A check is considered crossed when two parallel lines are drawn across its face, which may or may not include additional words in the top left corner. While crossing a check does not affect its negotiability, it does provide a layer of protection for the holder.

Table of content

Legal use & context

The crossing of checks is primarily used in banking and financial transactions. It is relevant in areas such as contract law and commercial law, where checks are often used as payment instruments. Users can manage the crossing of checks through various legal forms and templates available on platforms like US Legal Forms, which provide guidance on how to properly cross a check to ensure its security and compliance with banking regulations.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A business issues a check to a supplier. The check is crossed with the words "Account Payee" and the name of the supplier's bank, ensuring that only the supplier can deposit the funds into their account.

Example 2: A person receives a check but wants to ensure it is secure. They cross the check with two parallel lines and add "Not Negotiable," meaning it cannot be transferred to another party (hypothetical example).

State-by-state differences

Examples of state differences (not exhaustive):

State	Crossing Regulations
California	Allows both general and special crossings; "Account Payee" is commonly used.
New York	Strictly enforces crossing rules; "Not Negotiable" is often required for security.
Texas	Permits various forms of crossing; emphasis on bank verification.

This is not a complete list. State laws vary, and users should consult local rules for specific guidance.

Comparison with related terms

Term	Definition	Differences
Crossed Check	A check that can only be deposited through a collecting banker.	Provides security to the payee; restricts transferability.
Open Check	A check that can be cashed at the bank counter.	More flexible; can be transferred to others without restrictions.
Not Negotiable Check	A check that cannot be transferred to another party.	Focuses on transfer restrictions; can be crossed or open.

Common misunderstandings

What to do if this term applies to you

If you receive a check, consider crossing it to enhance security. Use the "Account Payee" option if you want to restrict who can deposit the check. For assistance, explore the ready-to-use legal form templates available on US Legal Forms. If you have further questions or complex issues, consulting a legal professional may be beneficial.

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Quick facts

Typical fees: Varies by bank; check with your financial institution.
Jurisdiction: Governed by state banking laws.
Possible penalties: Fraudulent use of checks can lead to legal consequences.

Key takeaways

FAQs

What is a crossed check?

A crossed check is a check that can only be deposited through a specific bank, enhancing its security.